Ruth Adams
, the applicant’s wife, was jointly charged with her husband and others with offences of fraudulent trading, furnishing false information and Count 10. The Particulars of Count 10 stated that Terence and Ruth Adams together with two others “ Between the 5th day of August 1997 and the 12th day of January 2003 conspired together with Saul Solomon Nahome and other persons to conceal or disguise property which in whole or in part directly or indirectly represented the proceeds of relevant criminal conduct and/or drug trafficking of the said Terence George Adams with the intention of avoiding prosecution for an offence to which Part vi of the Criminal Justice Act 1998 applies and/or a drug trafficking offence or for the purpose of avoiding the making or enforcement in his case of a Confiscation Order.” Prior to the hearing in 2007 Ruth Adams had been seriously ill. The prosecution did not pursue the charges against Ruth Adams following her husband’s plea of guilty to Count 10. Following their arrest in April 2003 a Restraint Order prohibiting the disposal of assets was made against Terence and Ruth Adams on 22 July 2003. 5.At trial it was the Crown’s case that the applicant had retired from crime between 1991 and 1993 which was described as the “clearest measure of his success as a criminal businessman.” It was said that prior to the mid nineties Terence Adams had been able to maintain his lifestyle without the need to demonstrate any visible means of support, he had achieved this by placing his funds in the hands of third parties and nominees, drawing on those funds as and when necessary. It was in early 1995 that the Special Compliance Office of the Inland Revenue began an investigation into Terence Adams’s finances as a result of which it became necessary for him to provide details of his source of income over a period of some six years. Until he was murdered in November 1998, Solly Nahome played a principal part in organising Terence Adams’s financial affairs. Following his death his role in relationship to Terence Adams’s finances was assumed by three others – Ruth Adams, Nahome’s widow Joanna Barnes and a friend, an accountant/bookkeeper. It was the Crown’s case that these three individuals continued to practise the deceits necessary to conceal the fact that Terence Adams derived his income from the proceeds of crime. Joanna Barnes was also charged with forging a loan agreement ostensibly between her husband and Terence Adams, an offence to which she pleaded guilty. The Current Proceedings.6.In summary the applicant contends that at the time the Confiscation Order was made the prosecution could agree with confidence that there were no hidden or unidentified assets. If the available amount for the purpose of the realisable assets included an element of hidden or unidentified assets or a tainted gift that should have been included in the Judge’s certification, there was no suggestion by the Crown that there was such a finding. The assets comprising the available amount at the time of the original Confiscation Order have now been sold. The applicant has now exhausted all his assets. He has received minimal remuneration for such work as he has been able to obtain since his release from prison and is financially dependent upon his wife. It is denied that Ruth Adams has any capital reserves but even if she did they would not be available to the applicant in order to pay the Confiscation Order. 7.Further, as a matter of law, the Crown are not entitled now to make assertions that at the time of the original hearing the applicant had hidden any unidentified assets or had made tainted gifts to a third person in addition to the assets comprised in the agreed £750,000. The Crown are precluded, by the decision of the Trial Judge and their own agreement as to the basis of plea, from asserting that at the time of the Confiscation Order the applicant’s assets exceeded those comprised in the agreed realisable sum. Any assertion by the respondent that the applicant has a substantial capital reserve must be limited to the value of any assets which were comprised in the realizable assets held by the applicant on 9 March 2007 but which have not been realised since that date or realizable assets which have been obtained by the applicant from whatever source since March 2007. There are no further assets. It is accepted that the burden lies on the applicant to provide a full account of what has happened to the original realisable assets and also his assets as at the date of this hearing. 8.It is the respondent’s case that Terence Adams has failed to prove on a balance of probability that his current assets are worth less than the outstanding balance on the Confiscation Order. The evidence in the case is inconsistent with this proposition of fact in that money provided to Terence or Ruth Adams is in all likelihood his money but has been dressed up as loans or investments. Money paid to Terence and Ruth Adams ostensibly for services/employment is more likely to be a device to channel Terence Adams’s assets to him. Terence and Ruth Adams utilise cash (bank notes) in a manner which suggests a source of funds and a desire to conceal the extent of their spending. Their spending is inconsistent with their case that they have no capital or income of any substance and have accrued debts in the order of £160,000. 9.It is for Terence Adams to prove the facts necessary to obtain a Certificate of Inadequacy, there is no duty on the respondent to prove anything. It is not for the respondent to satisfy the court as to the source of any capital reserves which are funding the lifestyle of the applicant. The financial affairs of Terence and Ruth Adams are intertwined, they comprise matters which are known peculiarly to themselves. It is incumbent on Terence Adams to set out all these matters in a transparent, full and honest manner. The legal submission made on behalf of the applicant flies in the face of the wording of section 83 CJA 1988 and its purpose. Parliament cannot have intended that the Court upon such an application is required to ignore the existence of assets which are successfully concealed by a defendant when a Confiscation Order is made against him but which are now available to pay it.10.Witness statements on behalf of the applicant and the respondent were filed. Pursuant to an order of Nicol J the makers of some witness statements were required to attend court for the purpose of cross-examination. Terence and Ruth Adams gave evidence together with other witnesses identified below. On behalf of the Crown, witnesses were tendered for cross-examination, none of whom had been involved in the original confiscation proceedings. The Law11.Criminal Justice Act 1988“83. – (1) If, on an application by the defendant in respect of a confiscation order, the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be recovered under the order the Court shall issue a certificate to that effect, giving the court’s reasons……(3) where a certificate has been issued under subsection (1) above, the defendant may apply –(a) Where the confiscation order was made by the Crown Court, to that court;….(4) The Crown Court shall, on an application under subsection (3) above –(a) substitute for the amount to be recovered under the order such lesser amount as the court thinks just in all the circumstances of the case; and(b) substitute for the term of imprisonment or of detention fixed under subsection (2) of section 31 of the 1973 c. 62. Powers of Criminal Courts Act 1973 in respect of the amount to be recovered under the order a shorter term determined in accordance with that section in respect of the lesser amount.”12.In Glaves v. Crown Prosecution Service [2011] EWCA Civ 69 the Court of Appeal considered the circumstances in which a Certificate of Inadequacy could properly be granted to a defendant who claimed that he was unable to fully comply with a Confiscation Order made against him following his conviction. In these proceedings the report of the case at [2011] 4 Costs LR 556 was used as it provides a report of the full judgment which the neutral citation report does not. Toulson LJ (as he then was) gave the judgment with which his fellow judges concurred. At [13] he stated:“In Summers [2008] EWCA Crim 872… Penry-Davey J said at para 11:It is clearly established by authority and was accepted in this case that the burden of establishing that the realisable amount was less than the benefit so as to justify a lower figure for the confiscation order was on the appellant to the civil standard on the balance of probabilities and it is equally clear that if he sought to establish that that he had to do so by clear and cogent evidence; Wallbrook v. Glasgow… followed in Anderson [2005] EWCA Crim 384. Following from that, it is also clear that there is no burden on the prosecution to show a prima facie case of hidden assets, but for the appellant to provide evidence demonstrating the extent of his realisable assets: Barwick [2001] 1 Cr App R [S] 129 (p.445) and Barnham [2006]1 Cr App R (S) 16 (p83).”14 The expression “hidden assets”, used in Summers and other cases is not an expression found in the legislation and it is capable of misleading. There may be cases in which a court makes a positive finding that a defendant has hidden away all or part of the proceeds of his crime, but it is not incumbent on the prosecution to establish that fact. In Barnham Gage LJ giving the judgment of the court, said at para 41:“To hold that the prosecution must, in some way, show a prima facie case that the defendant has hidden assets in our judgment would defeat the object of the legislation. It is designed to enable the court to confiscate a criminal’s ill-gotten gains. The expression “hidden assets” is indicative of the fact the prosecution can have no means of knowing how and where a defendant may have dealt with or disposed of the proceeds of his criminal activities.”At [18] the principles applicable to an application pursuant to section 83CJA 1988 were identified as follows: “… The general principles were succinctly summarised by Mr David Holgate QC sitting as a deputy High Court Judge, in B [2008] EWHC 3217 at para 74:(1) The burden lies on the applicant to prove, on the balance of probabilities that his realisable property is inadequate for the payment of the confiscation order (see Re O’Donoghue [2004] EWCA Civ 1800, per Laws LJ at para 3). (2) The reference to realisable property must be to “whatever are his realisable assets as a whole at the time he applies for the certificate of inadequacy. If they include assets he did not have when the confiscation order was made, it is by no means a reason for leaving such fresh assets out of consideration”(IBID and see also Re Phillips [2006] EWHC 623 (Admin).)(3) A s 83 application cannot be used to go behind a finding made at the confiscation hearing or embodied in the confiscation order as to the amount of the defendant’s realisable assets. Such a finding can only be challenged by way of an appeal against the confiscation order. (see Gokal v. Serious Fraud Office [2001] EWCA Civ 368, per Keene LJ at para 17 and 24.)(4) It is insufficient for a defendant to say under s 83 “that his assets are inadequate to meet the confiscation order, unless at the time he condescends to demonstrate what has happened since the making of the order to realise the property found by the judge to have existed when the order was made”. (see Gokal para 24 and Re O’Donohue at para 3).(5) The confiscation hearing provided an opportunity for the defendant to show that his realisable property was worth less than the prosecution alleged. It also enabled the defendant to identify any specific assets which he contended should be treated as the only realisable property. The s 83 procedure, however, is intended only to be used where there has been a genuine change in the defendant’s financial circumstances. It is a safety net intended to provide for post-confiscation order events. (see McKinsley v. Crown Prosecution Service [2006] EWCA Civ 1092 per Scott-Baker LJ at paras 9,21- 24, 34 and 35.)(6) A Section 83 application is not to be used as a “second bite at the cherry”. It is not an opportunity to adduce evidence or to present arguments which could have been put before the Crown Court judge at the confiscation hearing (para 38 of Gokal at paras 23,24 and 37 of McKinsley).”At [44] the concurring judgment of Pill LJ in O’Donohue [18] was quoted with approval:“The judge has a fact finding exercise to conduct under s83 (1) of the Criminal Justice Act 1988. He has to assess the current value of realisable assets as a whole. All I would add, whilst expressing full agreement with what My Lord has said, is that the judge needs to keep a sense of proportion in conducting that exercise, however dishonest or uncooperative a defendant may have been with respect to what has been found to be one or more of his realisable assets. There could be cases where, on an overall view it would be open to the judge to hold that the value was on balance of probability inadequate within the section, even if the defendant has declined to condescend to give an explanation with respect to every single asset.”At [46] Toulson LJ citing passages from the judgment of Moses LJ in Telli v. Revenue and Customs Prosecution Office [2008] 2 Crim App R (s48) stated:“…. absent identification of all the realisable property held by him, the defendant will normally be unable to satisfy the court that the amount that might be realised at the time of the confiscation order is less than the amount to be professed to be the proceeds of his trafficking.” Toulson LJ identified the starting point for considering any application for a Certificate of Inadequacy as the Confiscation Order itself [52]. In assessing the evidence of a defendant Toulson LJ noted [53] that “… there is a balance of judgment to be struck. The courts are right to treat with some scepticism generalised assertions by someone whose credibility may be deeply suspect by reason of the facts of the offence. Absence of independent credible evidence to corroborate a defendant’s account is not fatal as a proposition of law, but it may well be fatal as a matter of fact…. At the stage of an application for a certificate of inadequacy the burden of proof is again on the defendant. He is unlikely to succeed unless the court is satisfied that he is being candid, and an application for a certificate of inadequacy is not intended to be a means of the defendant having a second bite at the same cherry. “[54]”… It is for the court to consider the totality of the evidence before concluding whether it accepts that the defendant has suffered a change of fortune such that he is probably not able to pay the balance of the outstanding monies “[55]”… It has been said many times that the statutory scheme for confiscating the proceeds of crime is intended to be draconian. So it is, but in administering the scheme it is right that the court should give a sense of justice and proportion, bearing in mind the essential purpose of the scheme, which is not to punish a defendant a second time for conduct for which he will have been sentenced but will have deprived him of the benefit of his criminal conduct.”[56].13.The applicant relies upon the authority of In re McKinsley [2006] 1 WLR 3420 which considered the application by a defendant who had been convicted of a drug trafficking offence pursuant to Section 17 Drug Trafficking Act 1994 to the effect that his realisable property was inadequate for the payment of any amount remaining to be recovered under the Confiscation Order made against him. The Drug Trafficking Act 1994 provides a parallel jurisdiction to that of the CJA 1988. The court upheld the ruling of Toulson J (as he then was) who held that it was not open to the defendant to seek to challenge the Crown Court judge’s findings as to his realisable assets on a subsequent application for a Certificate of Inadequacy on the ground that he did not have, and had not had when the Confiscation Order was made, the hidden assets identified by the Crown Court judge. Section 17 of the 1994 Act mirrors the provisions of Section 83 of the 1988 Act. The issue on the appeal was in what circumstances, if any, it is possible for an applicant in Certificate of Inadequacy proceedings to challenge the findings originally made by the Crown Court as to the amount which might be realised. It was the Crown’s case that the Certificate of Inadequacy procedure pursuant to Section 17 is intended to be used only where there has been a genuine change in the defendant’s financial circumstances since the Confiscation Order was made e.g. an asset has dropped in value. The defendant had a right of appeal against a Confiscation Order and that is the route to be followed on any challenge to the original Confiscation Order. It was the defendant’s case that the wording of Section 17 is not so restricted. It made sense for the Administrative Court to look at the whole picture and, if there had been any manifest error on the part of the court making the original order, then to correct it. It was submitted that a defendant is entitled to a Certificate of Inadequacy whenever he can satisfy the Administrative Court that his assets are inadequate to pay the amount of the Confiscation Order. The court is concerned solely with the current worth of the defendant’s assets. 14.The thrust of the arguments before the Court centred upon a construction of Section 17. This was in the context of an application by the defendant to go behind the original Confiscation Order by a means other than the appeals process provided by Section 9 Criminal Appeal Act 1968. It is in that context that the Court at [44] found that the Administrative Court does not have jurisdiction in Certificate of Inadequacy proceedings to go behind the basis of the Confiscation Order made by the Crown Court. An attempt to do so would be an abuse of process of the Court. The Court cited with approval the observations of Lord Lane CJ in R v. Dickens [1990] 2 (QB) 102, 105E namely that the object of the drug trafficking legislation is to ensure that the convicted drug trafficker has to part with the proceeds of his trafficking and that the extent of his realisable assets at the time of his conviction is likely to be peculiarly within his own knowledge. It is hardly surprising therefore, that the evidential burdens are placed upon him and that rigorous penalties are imposed in the event of non compliance with Confiscation Orders. At [30-31] the Court stated: “In our judgment a close examination of section17 against the background of the 1994 Act as a whole points strongly to the construction that the Administrative Court is limited to consideration of post confiscation order events and is not entitled to go behind the confiscation order even if there has been a manifest error.31. It is our view therefore that the structure of the Act points strongly towards the construction that it is not open to an applicant on an application for a certificate of inadequacy to challenge the Crown Court judge’s findings as to the applicants realisable assets. …”
Evidence in these proceedings.
The applicant and his witnesses.
Terence George Adams.
15.Mr Adams prepared two witness statements dated 4 June 2012 and 28 August 2013 exhibited to which were many documents. The statements set out the detail of the criminal proceedings together with the financial investigations and reporting which took place before and subsequent to the hearing in 2007. Mr Adams stated that he has been the subject of a protracted police operation which investigated every aspect of his life and financial dealings. He has also been subject to a detailed and rigorous enquiry led by the Special Investigations Unit of the Legal Services Commission who were making enquiries regarding the making of a Recovery of Defence Costs Order. He described this as “intense financial scrutiny” by the police and the Special Investigations Unit. Since March 2007 Mr Adams has made financial reports; initially to the Serious Organised Crime Agency, now to its successor the National Crime Agency (“NCA”), Mr Adams and his wife co-operated fully throughout the sale process of Fallowfield, any delay was not of their making. They provided total co-operation with the work of the Receiver in the realisation of the remaining assets. There is no dispute as to co-operation of Mr and Mrs Adams in the realisation of assets.16.As at August 2013 Mr Adams and his wife were living in a one bedroomed rented flat. The rent was paid by Mrs Adams using income which she had received for design work. Terence Adams receives no state benefit as he has not made sufficient National Insurance contributions. He has tried to find employment. In his oral evidence Terence Adams repeated his written assertion that he had no income, no realisable assets, no hidden assets and was wholly dependent upon his wife for money. He was frustrated by this, it led to arguments between them. Employment17.Following his release in 2010 Terence Adams began working for a jewellery company, Universal Imports, in Hatton Garden, London. The principal of the company is Mr Moshe Tobi. Terence Adams was introduced to Mr Tobi by a relative of Solly Nahome. The employment commenced in September 2010 at a salary of £25,000, it was subsequently reduced to £18,000. The employment was terminated in July 2011 because of the economic situation. Terence Adams said that he had always designed jewellery, he had no documents or material to support this assertion. He used to work from “one shop to another”, he worked with semi-precious jewels. Terence Adams had not shown Moshe Tobi any of his previous designs when he began to work for him. The two men worked on pendants and cufflinks which were mastered in Israel. Documents were produced by Ruth Adams which contained drawings of jewellery designed by Terence Adams. He said the inspiration came from looking through jewellery magazines, he would then tweak the ideas and make up the design. None of his designs were produced for Moshe Tobi as he was not interested in this type of jewellery, as it was too expensive. Terence Adams had never designed a piece that had been sold by Moshe Tobi. Moshe Tobi had confidence in him as a designer. Mr Adams’s probation officer had come to Hatton Garden to see him work as a designer. The NCA also make inquiries about Terence Adams employment. Moshe Tobi, however, was unhappy because the jewellery business is very secretive and within Hatton Garden they do not like strangers coming in. As a result, no one in the jewellery business wants to work with Terence Adams.The companies of Ruth Adams18.N 1 Angel is the company of Ruth Adams, it is an online clothing company. Terence Adams is employed by his wife but receives no salary. He creates and designs clothes. It was the idea of himself, his wife and Michael Ellis of Stirling Wholesale Limited to start the business. He has no training in the design of clothing, he has previously designed shirts and suits. Terence Adams would go to the offices of Michael Ellis, look at a number of designs and tweak them. There were no drawings, it was collaboration between himself and Michael Ellis. The company has sold only a few items of clothing. His wife had told him that Dale Golder had provided £25,000 for the company, he did not know how it had been used. Monies from Dale had been transferred from the company account into his wife’s personal account. 19.Ruth Adams has another company, Stara Stara, a jewellery business. She had also done interior design work. His wife keeps it away from him, he is not interested, he is frustrated because his wife is the breadwinner. They do not speak about matters in their house because of the intrusion of surveillance over the years. He knew nothing about the design work for which Dale Golder paid Ruth Adams. Expenditure20.Ruth Adams pays for everything. Terence Adams was unaware that by January 2012 she had spent all of her share of the proceeds of sale of Fallowfield. Their weekly outgoings are £200 plus £250 rent on the flat, an annual expenditure of £23,000 - £24,000. Terence Adams was aware that his wife had made payments for dental treatment and to the Grove Hotel (the Spa). There had been visits to the Royal Opera House, a visit to the Dorchester Hotel, a visit to the Ivy and some 12/13 visits to Browns Hotel.21.Terence Adams loves the opera, when he came out of prison for the first time his wife took him there for his birthday. On two subsequent occasions they were given tickets through a family connection. His wife took him to the Dorchester for a massage. Terence and Ruth Adams do not drink. Save for one occasion in Browns when his wife paid the other occasions are paid for by friends or family. The suggestion that he and his wife have spent £15,000 on restaurants and entertainment was “absolute rubbish”. To suggest that their average annual expenditure was £97,000 was “laughable”. Money/Loans provided by friends22.When Terence Adams was released from prison in June 2010 his wife was living at an address owned by a friend of hers named Haart, he is no friend of Terence Adams. Terence Adams questioned his wife about the situation, he did not like it when he learned that Haart was paying the rent on the property. Terence Adams told his wife it had to stop. Ruth Adams did discuss the loan of £35,000 made by Dale Golder, she never spoke of any repayment.